How to tell if a “good deal” isn’t actually that great

Alyssa Furtado, co-CEO of Ratehub.ca is on a mission to help Canadians find the best financial products and services.

Sky-high grocery bills and housing costs combined with the spectre of a recession have many Canadians struggling to make ends meet. In times of economic uncertainty, making informed decisions around mortgage rates, credit cards, savings and investments is critical — every percentage point counts.

Alyssa Furtado has made it her mission to help Canadians access the best financial products and services. She founded Ratehub.ca in 2010 with James Laird to do just that, building a platform that makes it easier to compares products —like an Expedia for personal finance. In 2014, Ratehub.ca became the first comparison service to integrate an in-house mortgage brokerage and, in 2021, they launched their own insurance brokerage. Today, Ratehub.ca and MoneySense.ca (its online personal finance magazine), help more than 24 million Canadians choose bank accounts, investments and credit cards and get insurance quotes and mortgage rates.

“I want Canadians to be armed with the information and tools to make better decisions,” Furtado says. “Everyone deserves access to the same information. It should be easy to understand, clear and empowering.”

Here, Furtado shares tips on shopping around, what to look for in the fine print and her favourite thing to splurge on.

Have you noticed any changes in consumer habits? Are people shopping around for better rates these days?

When looking at January’s Consumer Price Index, it’s clear that persistently high food, gas and shelter prices continue to affect consumers. So it’s no surprise we’re seeing more consumers research things like mortgages online. With household budgets becoming tighter, it’s really important to make informed decisions — and that means doing your research and comparing the market for everything from your mortgage to your credit card.

What’s your advice for getting the best rate?

Many Canadians think that because they’re loyal to their bank or financial provider, they’ll get better rates. But that’s often a myth. You need to push your bank to give you the best rates, and you also need to look into other providers. Oftentimes, the best rates come from challenger banks. They might have a smaller brand name, but they still offer great products and they’re willing to price them more aggressively to gain market share.

Make sure you’re finding the right product for you. Credit cards are a great example: the best cashback credit card depends on what you spend most of your money on. We have a tool that helps Canadians enter their spending habits, and then we can tell you “since you’re spending a lot on groceries, this card offers 4 per cent on groceries, and this one will be a better return for you than a standard flat fee earn rate.”

Financial products are complex and they vary a lot — even compared to when I got into this space over a decade ago. There used to be one five-year fixed rate. And now there’s many different five-year fixed rates, depending on if you’re refinancing, if you’re renewing, if you’re buying over a million or under a million, if you plan to live in the property or if you plan to rent it out. It’s important to make sure you’re getting an accurate quote that specifically applies to you.

How can someone tell if a “good deal” isn’t actually that great? Are there any red flags to look out for?

As a consumer, I’m always looking for the catch. When I see a really good product, before getting totally excited, I want to know, “What am I missing here?” I want to know why I should want this product and make sure that I understand the drawbacks.

Read the fine print. Sometimes a great mortgage rate can come with a penalty if you want to break it early. If you see a rate featured in an advertisement, make sure you understand if it’s a promotional rate or if it will continue forever.

What’s your top personal finance tip?

Make sure you understand the ins and outs of Tax-Free Registered Savings Accounts (TFSAs) and Registered Retirement Savings Plans (RRSPs). They are both great money-saving machines, but they operate differently and can be confusing.

An RRSP is a great tool to save for retirement, but it’s also useful if you’re a soon-to-be first-time home buyer. You can withdraw up to $35,000 from your RRSP tax-free to put toward your first home purchase, as long as you pay back the withdrawn funds within 15 years. The RRSP can also be a good place to put savings if you’re planning on getting a new degree. Under the Canadian Government’s Lifelong Learning Plan, you can withdraw up to $10,000 annually (up to a total of $20,000) from your RRSP to put toward higher education for you, your spouse or your common-law partner without paying withholding taxes.

TFSAs are best for making big purchases in the near future. Since funds in a TFSA can be withdrawn at any time without being taxed, this type of registered account is a great option if you require easy access to your cash.

Two of the big mistakes people make with registered accounts include over-contributing to your TFSA or RRSP and making early withdrawals from your RRSP.

What’s your go-to splurge?

I have three kids under six, so I probably splurge the most on help. Someone who helps us clean our house, or our babysitter (who’s our next-door neighbour). Getting a date night with my husband is probably the biggest splurge of all. And it keeps our budget in check — it’s so hard to get out anyways that it doesn’t happen too much.

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Photo credit: Ratehub